How CSPs can change their game due to the COVID-19 crisis

networking
The coronavirus pandemic could drive some services providers to more of a business-to-business model instead of business-to-consumer, according to BearingPoint CEO Angus Ward. (Pixabay)

While no one can be certain what the telecommunications landscape will be like a few months from now, let alone a year from now, the coronavirus pandemic could give communication service providers (CSPs) a chance for an industry refresh.

As a whole, CSPs are getting high marks for keeping students and employees safely connected from their homes to networks, but they need to pivot beyond just providing connectivity, according to Angus Ward, CEO, BearingPoint//Beyond. Back in February, Ward was making the case that CSPs needed to transition from business-to-consumer (B2C) models, where products are sold to consumers, to a business-to-business (B2B) model that creates and sells entire solutions and platforms to end customers.

Ward, who is a consultant to service providers, said CSPs needed to do more than sell standardized "connectivity plus infrastructure" products to their customers. The transition by CSPs from B2C to a B2B model is even more important now that the coronavirus has shackled economies across the globe and tightened margins for service providers. With less money in the market, the competition between CSPs will intensify as well, according to Ward.

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With the telecom industry at a crossroad, Ward believes 5G and IoT-based services and applications will enable CSPs to emerge as more than just connectivity pipes.

"There's a new business model," Ward said. "I wonder whether now with coronavirus we're going to see a stronger need for CSPs to move faster to create solutions rather than just selling products. As far as the enterprise CIOs, they want these new solutions quickly. They don't want to spend nine months stitching these different products together to try and create a new solution out of them.

"I think this comes at a really interesting crossover point because there's so much happening now. I think we're moving from telecoms being in this world where most of their revenue comes from selling high volume, repeatable standardized connectivity services to mass markets. The switchover to B2B starts to become even more important."

The panic shopping in supermarkets has been mirrored to a degree in the telecom industry, according to Ward. He said he recently spoke to a Tier 1 client that had its best sales week ever in the face of the COVID-19 crisis.

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"Whether it's fixed. Whether it's mobile. Whether its remote working or whether it's VPN, all kinds of services are being bought to enable a completely new operating model where everyone works from home," Ward said. "I think a lot of telcos had an extremely good sales week as people literally went panic buying in the supermarket to buy all kinds of things.

"We had all kinds of different things being bought. So I think telcos initially have done well because of this change in the operating model to remote working."

While CSPs may have done well in the short-term of the coronavirus pandemic, having manufacturing plants, sporting events, and retail shops shut down will have a long-term impact.

"I just wonder whether those who are hanging on to the B2C market, the low margin prepaid phones, the MVNOs launching second brands and all that, will be the most adversely affected because these are the guys that are not going to pay their mobile phone bills," Ward said. "They're probably the people most at the margin and impacted the most by the coronavirus. The strong B2B companies are where the money is going to be made in the next 12 months.

"The people moving down the B2B track have a rich monopoly on different remote working solutions and SaaS-based cloud solutions. With 5G and IoT, I think the B2B CSPS will do the best because they have the corporate customers, and the ability to engage in new business models. They've got the partner ecosystems, and they have the richest services, which are probably the most value to their enterprise customers who need to rapidly solve their problems."

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